What is one potential outcome of a shareholder derivative action?

In a shareholder derivative action, shareholders sue on behalf of the corporation, typically to enforce a right that the corporation itself has failed to assert. A significant potential outcome of such an action is obtaining a settlement for damages to the corporation. This can occur when the shareholders successfully prove that the corporation suffered harm due to the actions or inactions of management or the board of directors. If a settlement is reached, it may involve the corporation receiving compensation for the damages incurred, which ultimately aims to benefit the corporation and, by extension, its shareholders.

This outcome emphasizes the role of derivative actions in corporate governance, allowing shareholders to seek justice for mismanagement or breaches of fiduciary duties. The settlement typically serves to restore the corporation's financial standing and deters future misconduct by leaders within the company. In contrast to other outcomes, such as increased dividends, corporate dissolution, or immediate stock price reductions, the focus of a derivative action is on rectifying wrongs done to the corporation, thereby aligning more closely with option B.